How do you register a company name in the UK?
Registering your business with Companies House as a limited liability business offers certain advantages. That said, you cannot choose any old name you like. In this guide, you will find out about what constitutes a business trading name and the process you need to go through if you want to register it officially.
Why register your company?
By registering your company name in the UK, your enterprise will be officially recorded at Companies House. This is the registrar of firms in the UK. It works as an executive agency of the government. By doing so, you will usually have your personal income calculated differently because you’ll be paid dividends from the business or take a salary. In essence, this means being able to lower the amount of National Insurance Contributions you are liable to pay.
In addition, obtaining a limited company status means separating business accounts from your personal ones. If you subsequently build up debt that you cannot immediately repay, then it is the limited company that is liable for them, not you personally. This is good if you run a new business from your residential address because your home won’t necessarily be at risk if the business were to fail. This separation between the professional and the personal is known as making your company a distinct entity. Ideally, the registered company address will not match your home address under such circumstances.
Another reason to register your company name is to provide a more professional image to would-be clients. Some people only procure professional services through businesses which have gone through the full company formation process. It can also help you to obtain funding in the form of loans and grants in some cases.
One of the most important reasons to put your business through the company formation procedure in the country is so that you can sell equity within the enterprise. Selling shares and transferring partial ownership is much easier within the framework of a limited company. This also helps whit succession, if you choose to retire from business life in the future.
Finally, opting for formal registration means that no one else can use your business name. This is probably one of the most significant reasons that owners choose to go for the official registration of their company name. Without doing so, another enterprise could use your business name and there is little you can do about it without registration.
Do sole traders need to register their business names?
No. If you have no need of a registered office and are quite happy to continue to trade from your existing home or office address, then there is no need to register your company name. You can choose to continue operating as a sole trader for your entire career, if you want. You are obliged, however, to inform HMRC of your trading status even if you don’t convert to a limited company within three months of setting up. This is regardless of whether or not you have shareholders in your business or an accountant who will file your tax return on your behalf at the end of the financial year.
Registering with Companies House
The process for registration is now simple enough to do online. All you need to do is to head to Companies House’s website and search for businesses which have similar names to the one you intend to register. The availability checker is easy to operate. Just type in what you’d like to use and the system will let you know if it is too close a match to a name that is already listed.
Steer clear of similar terms in your chosen name. For example, you cannot call your business ‘Jane’s Window Cleaning Ltd.’ if ‘James’ Window Cleaning Ltd.’ or ‘Jane’s Window Services Ltd.’ is already on the register. Likewise, you cannot merely use punctuation to make your enterprise’s name different from another one. Numbers may also be disallowed on the basis that they are too similar to another business name. For example, you would not be allowed ‘Cars 4 All’ if ‘Cars For All’ was already in use. Furthermore, you cannot use so-called sensitive words in your name in the UK. Avoid swearing and other abusive terms and you should be fine!
Next, you will need to enter your official address. This works like a service address to which all of your official correspondence will be sent so it has to be somewhere you can access the post. However, it does not need to be the place you actually conduct your work from if that is not practical. Some start-ups may be planning on moving premises in the next few months so you could use your home address, for example, for this part of the process.
The next step is to choose a code for the standard industrial classification, or SIC, of economic activities your enterprise undertakes. There’s a long list of them from painting and decorating to providing legal services. Finding the most appropriate SIC is straightforward because all of the same sorts of activities are listed together in a rational way.
You then need to register your personal details – name, date of birth and so on – as a part of the process. As a sole business owner, all you need is your own, but for company formations that include shareholders and partners, you will need everyone else’s, too. All of the people of significant control within the business must be listed along with the sort of company structure you have opted for. This could be something like a 60-40 partnership, for instance.
Once all of the relevant details have been added about your business, its name and how it is owned, you will be obliged to sign a statement of compliance. This is the legally binding part of the registration process so read it carefully before you put your signature on it. There is something called a Memorandum of Association which must be read before you sign your statement. It relates to all of the regulations that will apply to running a business of your sort. Claiming ignorance of it at a later date if you are found to have fallen foul of the rules is no defence.
Lastly, a fee must be paid in order to become registered. Although the fee payable to the government’s registrar is the only one you are obliged to pay, many new company directors choose to form their business via an agent. In such cases, you will also need to pay your fee to them in order for the limited company to come into being.
What’s the difference between a trade mark, a brand name and a company name?
A company name is what your organisation trades as. Sometimes, you can have businesses which are bought by larger ones which are then part of the same organisation with the same registered office as their corporate headquarters. However, more than one trading name might operate within the same organisation. Corporate structures differ when more than one name is in use for sales and marketing purposes. In many cases, the name being used is nothing more than a brand of the holding company that actually owns it.
Brands and company names are not the same as trade marks. Essentially, a trade mark is a way of distinguishing a brand or product as having a unique and registered name which means that it is the intellectual property of an organisation. It can be equally applied to services. Trade marks apply to the product or service that is being sold and not necessarily to the organisation’s name that produces them. You may not register a new business officially by using the same name that exists on a current trade mark.
The pros and cons of a registered limited company
There are plenty of reasons to register your business name:
- Good for shareholder arrangements.
- Tax-deductible pension contributions for employees.
- Protect your business name from infringement in law.
- Often lower NICs for business owners.
- Greater reputational authority.
- Limit your personal liability with business debts.
- Create a professional image.
There are some other factors to take into consideration, too:
- Some company accounts will be open to public inspection.
- More complex accounting methods are usually required than sole traders can use.
- Formation agents fees may be levied to take you through the process.
- The person with significant control of a limited company must be publicly listed.
- Limited liability businesses are usually liable to pay corporation tax.